Levi's Wins Distribution Dispute

The European Court of Justice has sided with Levi-Strauss in its dispute with Tesco, the UK supermarket chain, over the distribution of cut-price 501 jeans. The court has said that Levi-Strauss can prevent Tesco from importing its products from outside the European Economic Area - the EU plus Norway, Iceland and Liechtenstein - and selling them at greatly reduced prices. Before the ruling Tesco was selling Levi 501 jeans, purchased inexpensively in the US, for £27.99 as against £50 in Levi authorised shops.

Levi Strauss argued that its premium brand reputation was in danger of being damaged if any supermarket could sell its products at 'bargain-basement prices'. It also claimed that staff selling its jeans needed special training. Levi Strauss said its victory would help other brand owners 'who invest heavily in research and development.' These sentiments were supported by the British Brands Group which applauded the 'vote of confidence in the integrity of brand manufacturers'.

While admitting to 'disappointment', Tesco recognised that the ruling did not prevent them from importing Levi's or other goods such as cheap designer clothes, perfumes and cosmetics from the grey market within Europe. Indeed, Safeway, a competitor of Tesco still intended to sell 120,000 pairs of Levi's sourced from the European grey market. Nevertheless, the European consumer lobby, BEUC, claimed the ruling was a bad day for consumers, 'transnational corporations use trademark law to restrict competition and charge higher prices in Europe.' Others called for the European Commission to rectify the 'absurdities' of EU trademark legislation.

Based on: Anonymous (2002) Consumers Fall for Levi Message, The Guardian, November 21, 25; Hedberg, A. (2001) Tesco Vows to Fight On, Marketing Week, November 22, 7; Osborn, A. (2001) Levi's Wins Fight to Halt Tesco price Cuts, The Guardian, November 21, 13.